H&M PESTEL Analysis

Political

As a global brand operating a number of stores across the globe, the monitoring of political risk is increasingly important for H&M. The organisation has franchised outlets in a number of markets and countries that are increasingly politically unstable, including Turkey, Egypt and Lebanon, and state that they monitor any changes closely and have contingency plans in place to deal with any political instability as advantageously as feasible for both the stakeholders of the company and the company itself (H&M, 2017c).

Due to regulatory reasons, H&M has to collaborate with franchising partners to operate their brands in United Arab Emirates, Kuwait, Qatar, Saudi Arabia, Egypt, Oman, Bahrain, Lebanon, Israel, Morocco, Indonesia, Jordan and Thailand, despite franchising not being a part of the firm's general expansion strategy (H&M, 2017b).

Economic

Despite the negative effects that Brexit has brought for currencies across, Europe, H&M report that its June 2017 sales rose by 7 per cent on a local currency basis in comparison to June 2016, and grew 10% when converted into Swedish currency, the Krona (Botter, 2017).

Socio-Cultural

In the present day, increasing levels of transparency are demanded off businesses, as consumers want to investigate where they are giving their money to. H&M are increasingly adhering to this demand, with the brand announcing in June 2017 that they will begin to release quarterly updates, and also publishing its CSR reports online (Botter, 2017).

With consumers being increasingly influenced by media and celebrities to adopt a luxurious and materialistic lifestyle, current trends indicate that consumers would prefer to spend more for designer fashion goods (Amatulli et al., 2016). H&M announced its latest designer creation with Erdem to be released in 2017, which allows the brand to meet this trend (Gowans-Eglinton, 2017).

Technological

H&M continue to develop their app for mobile devices, recently unveiling the use of the H&M club function, which allows consumers to collect reward points from their online and instore purchases using the app on their mobile device (H&M, 2017a).

The third-party logistics provider utilised by H&M in the UK, Hermes, has a strong reputation for technological advancement, and has an extensive network of supply chain technology to track all logistics operations, aiding the service provided by the firm (H&M, 2017a).

Environmental

- H&M aim to be 100 per cent circular and renewable by 2030, meaning that all products will be generated from old products of the firm, and that only recycled and durable materials will be used for products (Pergrankvist, 2017).

Legal

- In the past two years, H&M has been involved in a number of legal disputes regarding infringement by the clothing retailer. Perhaps the most prominent occurred in 2015, when the retail giant lost a patent dispute worth multi-millions of pounds against a UK manufacture for infringing a coveted technology in Bras (Solicitors Journal, 2015). While H&M have the funds to cover such a legal dispute, the firm now operate a stringent risk management system to avoid such a dispute arising again, given that it is damaging to firm reputation (H&M, 2017).

References

Botter, L. (2017) 'H&M Moving to Quarterly Updates After Reporting A Solid Rise in June Sales.' The Street. [Online] [Accessed on 18 July 2017] https://www.thestreet.com/story/14230312/1/h-amp-m-moving-to-quarterly-updates-after-reporting-a-solid-rise-in-june-sales.html

Gowans-Eglinton, C. (2017) 'H&M announces its next collaboration will be with Erdem.' The Telegraph. [Online] [Accessed on 20 July 2017] http://www.telegraph.co.uk/fashion/brands/erdem-hm-collaboration-november-2017/

Spary, S. (2017) 'Here's Why Thousands Of People Are Calling On Zara And H&M To Drop Some Of Their Suppliers.' Buzz Feed News. [Online] [Accessed on 17 July 2017] https://www.buzzfeed.com/saraspary/zara-and-hm-petitioned-by-129000-people-after-report-claims?utm_term=.rf270DrldM#.tb4jxKVPQ3